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Valued at $7.17 billion, SoundHound AI (SOUN) is a leading artificial intelligence (AI) voice technology company known for its innovative speech recognition and natural language understanding solutions. It offers its advanced AI voice solutions to a diverse range of industries, including restaurants, automakers, and call centers.
The stock jumped onto Wall Street's radar in February 2024 when AI chip giant Nvidia (NVDA) disclosed a stake worth $3.7 million via a regulatory filing. More recently, though, SOUN has been gaining attention for key partnerships that investors expect to fuel significant growth - and at least one analyst sees more upside in store for the AI stock.
Here's a closer look at this Santa Clara-based AI growth stock.
About SOUN Stock
SoundHound AI has delivered multi-bagger returns in 2024, with its stock price surging over 930% year-to-date. After spending most of the year in penny stock territory, the breakout has been spurred by rising demand for Soundhound's voice AI solutions, as reflected by recent contract wins.
Key technical indicators all confirm the stock's bullish trend over short-term and longer-term time frames, though SOUN's 14-day Relative Strength Index (RSI) of 84.38 indicates the stock is overbought at current levels. This suggests a short-term pullback is likely - which could present a potential buying opportunity, for investors looking to participate in the next leg of Soundhound's uptrend.
Soundhound Reports Q3 Results
SoundHound AI reported strong financial results last month for its third quarter of 2024, with revenues reaching $25.1 million, an 89% increase year-over-year, and the net loss of $21.8 million, or $0.06 per share, coming in slightly better than the consensus estimate for a loss of $0.08 per share. On an adjusted basis, SOUN lost just $0.04 per share.
The company has diversified its customer base considerably from a year ago, when the auto industry accounted for 90% of revenue and its largest customer generated 72% of the top line. Now, management says only 12% of revenue is attributable to Soundhound's largest customer, with “well-balanced contributions across automotive, restaurants, financial services, healthcare and insurance sectors, each contributing 5%-25% of revenue.”
For the full year 2024, the company expects its revenue to be in the range of $82 million to $85 million. Looking ahead to 2025, SoundHound projects revenue to be between $155 million and $175 million, though it does not yet expect to be profitable.
Soundhound ended the period with cash and cash equivalents of $136 million.
Recent Contract Wins Send SOUN Stock Soaring
SOUN plunged 17% on Nov. 13 in response to its earnings report, as investors were unimpressed with the upwardly revised revenue guidance amid shrinking margins and a lack of visibility on Soundhound's road to profitability. However, the stock has since surged higher, driven by a pair of contract wins that have stoked optimism over its future growth.
First, the company rolled out voice ordering across all Torchy's Tacos locations. Then, Soundhound announced a pilot program to integrate a voice AI ordering option at the massive Church's Texas Chicken chain, further expanding its reach.
As a result, SOUN stock has spiked 249% from its post-earnings lows set in mid-November.
SoundHound AI Scores a New Street-High Target Price
Analysts remain bullish on the AI company, even as the stock's consensus rating has slipped from a “Strong Buy” two months ago to a “Moderate Buy” now. Among the six analysts in coverage, 4 recommend a “Strong Buy,” and 2 say SOUN is a “Hold.”
However, widely followed AI stock bull Dan Ives of Wedbush recently boosted his price target on SOUN stock by more than 100%, raising it from $10 all the way to a new Street-high of $22.
Calling SOUN a “long-term winner in the AI Revolution,” Ives backed an “Outperform” rating on the stock, and cited Soundhound's "aggressive but accretive M&A strategy with three acquisitions over the past 18 months (Amelia, SYNQ3, Allset) to expand its reach to more opportunities for voice AI solutions" as a positive catalyst for growth.
As of this writing, SOUN is less than 3% away from reaching Wedbush's newly hiked price target. While the AI startup may have plenty of room to keep expanding over the long term, investors may want to be cautious about snapping up shares around their current overbought levels.
